US security check company that greenlighted Snowden slapped with $30mn for fraudulent practices

The firm that was the largest provider of background security checks on numerous US federal agency employees – including whistleblower Edward Snowden – will have to pay out $30 million, concluding a four-year investigation into its lax practices.

The United States Investigations Services Inc. (USIS), as the private company was known, had been suspected of massive irregularities in its work for some time. The probe uncovered very serious breaches of security from 2008 to 2012, as hundreds of thousands of cases were found to be poorly processed, before being approved and sent to the agencies tasked with ensuring national security.

The 2011 lawsuit, joined later by the US Justice Department, resolves claims that no adequate quality control was carried out during background checks. The $30-million settlement also relates to a wider bankruptcy deal for Altegrity Inc, the USIS parent company, which filed for bankruptcy in February.

It transpired in early 2014 that the USIS had submitted a total of 665,000 incomplete investigations to the US government, which amounted to about 40 percent of the caseload over four years, up until late 2012. The Justice Department then filed a 25-page civil complaint against the USIS, alleging they simply “flushed” hundreds of thousands of poorly performed security checks to various federal agencies. These included the Department of Defense, the Department of Homeland Security and the National Security Agency – a fact that exposed the country to very serious potential security breaches.

The USIS, which employs some 6,000 workers, handles roughly 45 percent of the government’s security checks on potential new hires. It is responsible for some 2.2 million background checks, including that of former NSA contractor and whisteblower, Edward Snowden, and Aarone Alexis, the technology contractor who murdered 12 people at the Washington Navy Yard last year.

About 90 percent of the company’s caseload used to come from the US government, which supplied it with $4 billion in contracts over the years.

The current investigation into substandard performance was not related to the separate Snowden probe, but the government’s attention has been focused on the company for some time now.

"Shortcuts taken by any company that we have entrusted to conduct background investigations of future and current federal employees are unacceptable," the head of the Justice Department’s civil division, Benjamin Mizer, told reporters in a statement.

Altegrity, the parent company of the now-defunct USIS, declined to comment.

In its internal practice of ‘dumping’ incomplete cases to the US Office of Personnel Management, USIS was ruled to have taken shortcuts in order to boost its profits. The damages were set at $30 million, which was the sum Altegrity/USIS initially believed it was owed.

In the course of the investigation, the company was found to generally have a very lax attitude to its work.

The Justice Department complaint alleged at the time that one USIS official even joked to his quality-control higher-ups at the USIS that the company had “flushed everything like a dead goldfish.”

Also in late 2010, another employee talked of a “backlog” of work, while discussing tickets to a New Year’s Eve show in the same email. "Have a bit of a backlog building, but fortunately, most people are off this week so no one will notice!" the unidentified employee was reported to have said in the correspondence.

The lawsuit was first filed by former employee Blake Percival, under the False Claims Act in June 2011. He is set to receive a share of the settlement under the law, but the sum is not being disclosed. The Justice Department later joined the lawsuit.